CME Sees Record Volumes in WTI-Brent Crude Oil Spread Options

Volatility in energy markets coming on the back of the US shutdown, Fed tapering and the coming winter season in Europe and North America have boosted trading activity in the main oil futures contracts. The world’s largest futures marketplace, the Chicago Mercantile Exchange (CME), reported record trading activity in its NYMEX WTI-Brent Crude Oil Spread Option contract on the 23rd of October.

CME offers a range of energy contracts, and traders can exploit spreads between WTI and Brent contracts. One of the drivers of increased activity in the oil markets.

CME saw 25,474 contracts traded on the exchange for the NYMEX WTI-Brent Crude Oil Spread Option contract (BV), this surpassing the previous record of 19,400 traded on July 1st.

"With robust trading in our spread products, as well as the benchmark NYMEX WTI and Brent outright contracts, our crude oil and refined products complex is in a very strong position right now," said Gary Morsches, Managing Director of Global Energy at CME Group, in a statement.

"More and more, market participants are choosing CME Group as the preferred venue for trading the WTI-Brent spread and for managing risk in global energy markets," Morsches added.

Spreads have increased between the two main energy contracts, WTI and Brent to approximately $11 a barrel. Spreads between the two contracts occur due to transportation costs between the two contracts. For example, if the US is the net consumer of Brent, WTI will be more expensive than Brent because it has to have the same price, if shipping is included.

The CBOE OVX index, the main volatility index that measures the market sentiment of crude oil trades has been range bound since September, where there was heightened volatility on the tapering decision. The index is currently trading at 21.88, however, on the 23rd of October there was a spike which pushed the index to 23.80.